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The DRA is coming to California Medi-Cal, we think!

Medi-Cal is California’s version of the federal Medicaid program that pays for medical and long-term care for patients who meet the eligibility criteria. In order to get the federal Medicaid funds, a state must set up and operate the program and contribute about half of the funds for it. Because it is operated by the states, each state can call the program whatever it desires. While most states just call their program “Medicaid,” California calls its program “Medi-CAL.”

The federal government has established rules for the program covering eligibility, share of cost (i.e. the co-payment each beneficiary must pay), recovery, and other related matters. Although the Feds put pressure on the states to adopt the federal rules for its state program, each state is free to create its own rules for its program; and, although the federal government could withhold funding for the program if the state does not adopt the federal rules, it has never done so. The only real restriction on the states is that the state rules cannot be MORE restrictive than the federal rules, least the state violate the federal supremacy rule. In California, our program is much LESS restrictive than the federal program with respect to eligibility for most benefits.

California’s Medi-Cal rules are essentially the basic federal Medicaid laws established in 1988 with the passage of the Medicare Catastrophic Coverage Act (MCCA). In 1993, the federal government passed the Omnibus Budget Reconciliation Act (OBRA) modifying the basic Medicaid law adding restrictions to the Medicaid rules regarding transfers (i.e. gifts) of assets. Except for some of the new rules regarding the treatment of trusts, California has never adopted the OBRA rules. Then, in February, 2006, the federal government passed the Deficient Reduction Act (DRA) that added even more restrictions to the transfer rules along with making other changes, such as limiting the value of the home that is treated as an exempt asset and changing when the penalty for making transfers starts. OBRA and DRA, combined, make it enormously harder to qualify for benefits on the program.

With the passage of the DRA in 2006, California began the process of changing our laws and regulations to implement not just the DRA changes, but all of the 1993 OBRA changes as well. This is a two step process in California. The first step was completed in 2008 when our state legislature modified our statutes governing the Medi-Cal program. The second step is for the Department of Health Care Services to promulgate and pass new regulations so that it can implement the new statutes. It has taken over 5 years, but DHCS, this past September, issued the first draft of at least part of the new regulations for public comment. The new regulations had many problems, which elder law attorneys across California, along with others, put in comments about. Now, we are waiting for a revised draft of the regulations.

Our crystal ball (for that is as good of a source of information about this as anything else) says that we should have the next draft in a year or so. The thinking is that the next draft is likely to need a little more tweaking, so we will have to wait for a third draft, which will probably be the draft that is passed and implemented. If our crystal ball is right, the restrictions and changes the Feds made to Medicaid under the DRA and OBRA should finally be incorporated into the Medi-Cal rules we use in California sometime in 2014 or 2015. Even without our crystal ball about when it will arrive, what is clear is that DRA is on its way to California. It is just a matter of time now. If you are worried about preserving your home and protecting yourself and your family from the devastating costs of nursing home care, call for an appointment with Janis to find out how we can help!